What is a Competitive Advantage ?
A competitive advantage exists when your business is able to provide the same or similar products and/or services as your competitors but at a lower cost and/or differentiated in some way such that superior value is created for your customer, and in turn you generate greater profits.
By its nature, obtaining a competitive advantage will form part of your strategic business planning process, which will entail assessing:
- Your target market; and
- Exactly who your competitors are within that market.
How to Achieve a Competitive Advantage ?
Businesses can achieve a competitive advantage through a number of strategies (both price and non price). These will vary depending on the type of business and industry sector, but may include:
- Promoting their particular know-how and skill
- Having unique intellectual property interests, eg. patents and trade marks
- Maintaining low cost structures
- Achieving superior brand awareness and reputation
- Meeting quality standards, such as through Australian Standards: www.standards.org.au
- Effectively using information technology
- Having an accessible and visible business location
- Providing a unique product and/or service
- Competitive price
- Effective marketing/promotion strategies
- Correctly identifying a market segment – that is, a particular niche market that is not being fully or properly serviced by competitors
- Obtaining a better understanding of what customers/clients want and offering them a product or service that meets their needs
- Understanding your core strengths and abilities and building your business around this core
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